South Korea to halt Iran oil imports from July 1

SEOUL, South Korea (AP) — South Korea said Tuesday it will halt oil imports from Iran starting next month due to a European Union ban on insuring shipments of Iranian crude.

The insurance ban, which is part of broader EU sanctions aimed at cutting the sources of finance for Iran's nuclear program, makes it impossible for South Korean companies to ship Iranian crude as they rely on EU companies to insure the shipments.

The sanctions affect two South Korean oil refiners, SK Energy Co. and Hyundai Oil Bank Co. South Korea's two other refiners don't import Iranian crude.

South Korea's government was in talks with the EU to extend exemptions for South Korea, which imported about 9 percent of its oil from Iran in 2011. On Monday, the European Union Council said exemptions from Iran sanctions will end on July 1 as scheduled.

"The EU will stop Iranian crude oil imports from July 1 and will stop offering insurance and reinsurance on Iranian oil imports. Therefore South Korea's Iranian crude imports will be suspended," said a joint statement released by ministries of commerce, foreign affairs and finance.

"The government will continue efforts to minimize the effects on domestic industry and the economy and it will continue negotiations," it said.

The government said it has been in talks with other oil exporting countries, such as Kuwait, United Arab Emirates, Iraq and Qatar, to find alternative sources.

South Korea was one of the seven countries that avoided U.S. economic sanctions after it reduced Iranian oil imports. In May, its crude imports from Iran dropped around 40 percent from the previous month.

In 2011, South Korea imported 87 million barrels of crude oil from Iran, up 20 percent from the previous year.